Your end of year financial fitness checklist
By Boring Money
10 Dec, 2024
The start of a new year is the perfect time to give your finances a quick check-up. Our financial fitness checklist can help you take stock of where you’re at, spot any areas that need a bit of attention, and set yourself up for a stronger year ahead! Whether you're aiming to save more, pay down debt, or make your money work harder, this simple checklist can help you get organised and focused.
Set up (or shape up) your budget
Setting up and keeping an eye on your spending budget isn’t the most thrilling task, but it’sa game-changer for sensible money management. And there’s no better time to get your finances in tip-top shape than the start of a new year.
A budget gives you a clear picture of what’s coming in, what’s going out, and where it’s all going. This means no more guessing if you can afford something or scrambling at the end of the month. It’s about staying in control and making sure your spending doesn’t outpace your income.
Reviewing your budget regularly is just as important as setting it up in the first place. Life happens - jobs change, surprise expenses pop up, or your priorities shift. Checking in with your budget every so often makes sure it still fits your current situation. It’s also a chance to spot any unnecessary spending and put that money to better use, whether that’s saving for a holiday, paying off debt, or building up your emergency fund.
The beauty of having a budget is that it helps you build smarter money habits. You learn to focus on what really matters, cut out waste, and stay within your means. Over time, this adds up to less stress and more financial confidence!
Review your savings and investments
Once your basic spending and saving habits have been reviewed, why not check in on your savings and investments to make sure they’re still on track?
If you’ve got cash savings, make sure you’re getting your money’s worth with the best possible interest rate. This is even more important now that rates are starting to come back down in light of reductions to the Bank of England’s base rate. So if you’re looking to lock your cash away in a fixed-rate account, browse the market and see if you can get a competitive rate. Or, if you’re opting for an easy-access account with more flexible rates, make sure your provider is still giving you a good deal for the added convenience.
As for your investments, it’s a good time to review where you stand and whether you’re moving in the right direction. Is your investment portfolio giving you good returns? And, if not, is this a symptom of wider market troubles, or do you have a dud somewhere that’s dragging down your profits? Perhaps your circumstances have changed – for example, you’ve decided to retire soon – and you want to adjust your risk profile to protect your assets (this process is also sometimes called “rebalancing”).
In other words, predictably, the end of the year is a great opportunity to sit back, reflect on the year just past, and work out if there’s anything you want to change before you head into 2025!
Make the most of your tax-free allowances
While we’re on the topic of investing, it’s a good idea to make sure you’re maximising your allowances. With tax-free thresholds dropping and investors’ gains increasingly under fire from the taxman, tax-efficient investing has never been more important.
If you’re investing, you should be using up your ISA allowance first and foremost. Every UK adult can invest up to £20,000 in ISAs every tax year and shield their returns from Capital Gains Tax and Dividend Tax; Meaning, essentially, you keep more of your money in your pocket.
For every investor, the ISA should be the first port of call. If you’ve got less than £20,000 to invest this year, it’s a no-brainer to make sure it’s all contained within this tax-efficient wrapper. If you’ve got more than £20,000, it’s wise to use up your ISA allowance first (and thus protect as much of your gains as possible), and then whatever you have left beyond this initial £20,000 can be invested in General Investment Accounts (but remember, there are no tax benefits on these).
If you’ve already got investments sitting outside of an ISA and you’d like to move them into one for tax purposes, you can do so – through an absurdly-named process called “Bed & ISA”.
Keep tabs on your pension plans
Pensions are one of those things we know we should sort out, but often put off. Sometimes for months, sometimes even for years. If you’ve got some free time between now and 2025, why not spare an hour to see where you are on your retirement saving journey?
First step, use our retirement saving calculator to pin down how much you’ve got, if you’re on track, and whether there’s anything you can do to nudge you towards your ideal retirement income. This 5-minute quiz will walk you through your wants and needs in retirement and help you to match them with your current saving strategy.
Once you’ve worked out where you stand, it’s time to consider your options.
If you’re on the right track, then good news! You can sit back and relax, or if you’ve got lots of different pots spread between lots of different providers, consider consolidating them all into one easy-to-keep-track place.
If you’ve got a gap left to fill, it could be a good opportunity to review your finances and whether you can afford to increase your workplace pension contributions. Remember, some employers will increase theirs as well, or maybe even match you!
And finally, if you want to take more control over your pension, or if your workplace scheme won't allow additional contributions, now could be the time to set up your own personal pension (SIPP)! Browse the market and see who could be the right fit for you with our pension provider comparison table.
Check your credit report
Checking your credit score might not sound exciting, but it’s an essential part of staying on top of your finances. Your credit score is basically a measure of how much lenders trust you to pay back money. It’s used to decide if you can get a loan, mortgage, or credit card and what kind of interest rate you’ll pay. By checking your score regularly, you can spot mistakes or signs of fraud early, like accounts you didn’t open. Sorting out these issues quickly can save you headaches later when you really need credit. It’s not glamorous, but it’s a straightforward way to protect your financial future and make sure your credit history stays squeaky clean!
Consider if you need insurance
Life rarely (never!) goes to plan. So if you’re in a position to do so, it’s wise to consider putting some backup plans in place to cover yourself and your loved ones in case the going gets tough.
Life insurance is there to support your loved ones financially if the worst happens to you. It can help pay off big commitments like your mortgage and cover everyday living expenses, giving your family stability when purse strings tighten. It’s a straightforward way to ensure their basic needs are looked after if you’re not around.
Income protection and critical illness insurance, on the other hand, are there to provide you with financial support if you’re diagnosed with a serious illness like cancer or a stroke, or if you need time off work to recover from an injury.The payouts can be used however you need, whether that’s covering medical bills, adapting your home, or simply keeping up with everyday expenses while you recover.
Both of these types of insurance are about being prepared for the unexpected. Without them, an illness or loss of income could force you to dip into savings or take on debt. With the right cover in place, you’ve got a financial safety net, so you can focus on your health and your family’s well-being.
Stay informed!
And finally, it’s crucial to stay abreast of financial news and trends to make sure you’re making the right choices for your money. With a new Labour government in Number 10 and upcoming changes to tax-free allowances and pension rules, there’s lots of change on the horizon and it’s likely that at least some of it will have an impact on your personal finances. That’s where Holly’s Blog can help you.
Every Friday, Holly gives practical, no-nonsense commentary on all things money, delivered in a way that’s easy to understand. Whether you’re looking to make wiser decisions about your investments or simply make sense of your day-to-day finances, Holly breaks it down without the jargon. The blog is packed with tips and insights tailored for real people – without a PhD in Economics!
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